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I've been encouraged by my employer to recalculate my W4 allowances in light of the tax law changes for 2018.

When I use the IRS's calculator it needs me to give answers for things like, Enter your total 2018 contribution for...

I'd like to update my W4 now if there's any advantage to be had, but I'm not sure how to come up with these values. Should I use the value to date? Project into the future assuming nothing changes? Guesstimate? Wait until next year?

IRS W4 Withholding calculator, page 3/5

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You basically give your best shot at each of these questions:

  • Some of these numbers are factual, e.g. income tax withheld to date.

  • Others are a matter of planning on your end, e.g. the amount of 401(k) contributions.

  • Finally, the rest are projections, e.g., your gross wages for the entire 2018.

You may want to stay on the safe side, which actually means overestimating your income, so that you don't owe penalties for tax under-withholding.

It is a good practice to do a mid-year check and course correction. To do this, you check the year-to-date figures, project where your tax liability and your withholdings are tracking, and make changes to your allowances number if and as needed.

  • Thanks, I found it confusing that some numbers were snapshots of whenever I happen to use the calculator and some were projections. I guess now it's not confusing at all if I can accept that it's a calculator and has no problem with this. – Louis Mar 17 '18 at 3:22

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